Important legal notice

61989C0338

European Court reports 1991 Page I-02315

Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

"since the concept of force majeure differs in content in different areas of the law and in its various spheres of application, the precise meaning of this concept has to be decided by reference to the legal context in which it is intended to operate".

4. In its judgment of 27 October 1987 in Case 109/86 Theodorakis [1987] ECR 4319, at paragraph 7), the Court ruled that, with specific regard to Articles 36 and 37 of Regulation No 3183/909,

"whilst [the concept of force majeure] does not presuppose absolute impossibility, it nonetheless requires the non-performance of the act in question to be due to circumstances beyond the control of the person claiming force majeure which are abnormal and unforeseeable and of which the consequences could not have been avoided despite the exercise of all due care".

5. It should be noted at the outset that that definition, by not confining the concept of force majeure to that of absolute impossibility and by taking into account the conduct of the economic operators concerned, implies, in the very words of the Court,

"a sufficient flexibility regarding not only the nature of the occurrence relied upon but also the care which the exporter should have exercised in order to meet it and the extent of the sacrifices which he should have accepted to that end" (see the judgment of 17 December 1970 in Case 11/70 Internationale Handelsgesellschaft [1970] ECR 1125, cited by the ODS (2)).

6. Let us now see whether the concept of force majeure as so defined is capable of covering a factual situation such as that described by the national court in its first preliminary question.

7. There can be no doubt that a strike taking place in undertakings other than the undertaking pleading force majeure may be considered to be a circumstance beyond the control of that undertaking. Indeed, it may be argued that any non-performance by the other party to a contract which is not due to the conduct of the holder of an export licence constitutes a circumstance beyond the latter' s control. That is what follows, in any event, from the judgment in Theodorakis, paragraph 8, as confirmed in paragraph 34 of the judgment of 10 July 1990 in Case C-334/87 Greece v Commission [1990] ECR I-2849.

"such an event is an ordinary commercial risk inherent in commercial transactions and it is for the holder of the licence (who is fully at liberty to select such trading partners as his interests in that respect may dictate) to take the appropriate precautions either by including the requisite clauses in the contract (in question) (3) or by effecting appropriate insurance".

10. In the instant case, however, the issue is not whether non-performance by the other party to the contract constitutes in itself a "an ordinary commercial risk": if there must have been force majeure, it will be found at the stage of the circumstances which gave rise to that non-performance. The question is therefore whether those circumstances are such "an ordinary commercial risk" or whether, on the contrary, they were so abnormal and unforeseeable that their consequences could not be avoided despite the exercise of all due care, not by the party who failed to perform his contractual obligations, but by the one relying on those circumstances.

11. In that respect, it cannot be ruled out a priori that a strike may constitute an abnormal and unforeseeable circumstance.

12. In its written observations, the applicant in the main proceedings referred, in particular, to Commission Regulation No 473/67/EEC of 21 August 1967 concerning import and export licences for cereals, processed products derived from cereals, rice, broken rice and processed products derived from rice (Official Journal L 204, p. 16), Article 9(2) of which expressly enumerates strikes among the circumstances to be regarded as being cases of force majeure (see point (f) ).

13. Just like Commission Regulation No 102/64/EEC of 28 July 1964 bearing the same title (Journal Officiel L 126, p. 2125), that regulation foreshadowed, for the agricultural products in question, the regulations laying down common detailed rules for the application of the system of import and export licences and advance-fixing certificates for agricultural products as a whole, such as Regulation No 3183/80, applicable in the case in point, as well as the earlier regulations (EEC) No 1373/70 of 10 July 1970 (Journal Officiel L 158, p. 1) and (EEC) No 193/75 of 17 January 1975 (Journal Officiel L 25, p. 10). The last two, however, did not contain a detailed list of cases of force majeure. In an annex to its written observations, however, the applicant in the main proceedings has produced a working document of the Commission drawn up pursuant to Article 20(3) of Regulation No 193/75, which has its corollary in Article 37(5) of Regulation No 3183/80, from which it follows that the competent authorities of almost all the Member States have already accepted that strikes, whether by dockers, the postal services, railways, or even the exporter' s own employees, constitute a case of force majeure justifying either the cancellation of the certificate in question or the extension of its period of validity.

14. In its judgment in Case 70/86 Commission v Greece [1987] ECR 3545, it appears to me that the Court also accepted, or at least did not rule out, that a strike may, in certain conditions, constitute a case of force majeure. In that case, in justification of a two-day delay in entering its financial contributions for June 1983 in the Commission' s account (the contributions were not entered until 3 June instead of 1 June), the Greek Government pleaded a general strike of bank employees which took place on 1 and 2 June. The Court considered, in paragraph 9 of its judgment, that the conditions of a case of force majeure were not satisfied in the case in point, given that the strike in question was foreseeable and that the delay in entering the financial contributions in question could therefore have been avoided. The Court had previously stated that,

"at least since 25 May the press had warned of strikes affecting several occupations, including bank employees, for 26 and 27 May"

and that

"on 29 May, the press warned of further industrial action and stated that the unions had called a strike for 1 and 2 June".

15. It follows from the foregoing that the question whether a strike which has taken place in an undertaking other that the one pleading it constitutes a case of force majeure requires an assessment of its degree of foreseeability and of the possibilities which the party pleading it had of avoiding the consequences arising from it.

16. In the instant case, it is apparent from the order making the reference (as well as from the observations submitted) that when on 25 February 1985 Jaka applied for the advance-fixing certificate in question, two strike notices had already been issued, on 13 and 21 February respectively. It is also apparent that the strikes thus announced for 4 March 1985 were nationwide and that they affected specifically named sectors which were the subject of collective agreements to which the great majority of the occupational federations belonging to the principal Danish union organization which had issued the notices were party. I consider that, in such circumstances, the fact that the strike would finally break out and affect sectors, such as transport, which were capable of affecting Jaka' s activities was not unforeseeable. Even if the ODS was right in contending that, because of the Danish system of collective agreements and the way it operates in practice, a strike is neither certain nor even distinctly probable at the time the notices are issued, and that it is impossible to foresee which undertakings will be affected, or even the date of commencement and the duration of the strike (see the end of the first paragraph of page 14 of the roneotyped version of the Report for the Hearing), that is not sufficient to make the strike an unforeseeable event. When it is a question of determining the existence of a case of force majeure, it is not sufficient for the person relying on it to show that it was not certain that the event which finally came about was going to take place, on the contrary, it is necessary for him to prove that, while it was not certain, it was at least distinctly probable that the event was not going to occur (or that for it to occur was abnormal).

17. Similarly, the mere fact that, despite the issuing of a strike notice indicating that the strike was going to commence during the period of validity of the advance-fixing certificate, "it was possible that the strike would not affect the undertaking [in question]" (see the wording of the first question) does not allow the conclusion to be drawn that its breaking out was abnormal or unforeseeable. On the contrary, in order for the carrying out of the threat to strike to have, in such circumstances, an unusual or unforeseeable nature, it would be necessary for it to have been so improbable that a prudent operator exercising due care could consider that the risk of its arising was negligible. (4)

18. The ODS objects that mere awareness of the possibility that a strike may break out is not sufficient to rule out the application of the provisions concerning force majeure. If that were so, Danish exporters of agricultural products would find it impossible to benefit from advance fixing during a period which could last from the month of December of the year preceding the expiry of the collective agreements until 1 March or, depending upon the circumstances, until June of the following year.

20. In fact, the applicant in the main proceedings has itself pointed out that Jaka was in the habit of applying for a certificate at the beginning of each month and that on 5 February 1985 it had received a certificate referring to 1 400 000 kg of preserved meat. It has not claimed that Jaka found it impossible to export that large quantity of meat during the period of validity of that certificate. The dispute relates only to an additional licence which had been applied for on 25 February 1985 and which referred to 700 000 kg of cooked ham products. The reason for that additional application lay in the fact that at that time the possibility of increasing exports to the United States had suddenly arose.

21. On 21 February 1985 the union organization had already issued the second and final notice of a strike. Moreover, it is common ground that during previous years the issuing of a second notice had been followed by a strike in three cases out of thirteen. In those conditions, the risk that a strike would occur could not be considered as negligible; it was no longer unforeseeable.

23. If it was not possible for Jaka to include appropriate clauses in the contracts concluded by it with its suppliers or with its customers, nor to take out insurance against the possible loss of the security lodged or against the loss of benefits arising from the advance fixing, it should have withdrawn its application for advance fixing of the refunds regarding the additional quantity of 700 000 kg and possibly also regarding the quantity in respect of which it had applied for advance fixing at the beginning of March.

24. In fact, from the time when the possibility of a strike could no longer be ruled out, it was necessary, according to the case-law of the Court, to exercise "all due care" to avoid the consequences to which it could lead. To forego the advance fixing and be satisfied, at the time of exporting, with the refund applicable on that date would not have constituted an "excessive sacrifice". (5) The refund applicable on the day of exportation is, in fact, supposed to reflect precisely the difference between the world market price and the Community threshold price.

25. In the light of the foregoing, I consider that it is necessary to reply to the first question in the way suggested by the Danish Government and the Commission:

"Articles 36 and 37 of Regulation No 3183/80 must be interpreted as meaning that there is no force majeure when supplies of raw materials to an undertaking which has obtained an advance-fixing certificate are halted owing to a lawful strike in other undertakings, if, in circumstances such as those of the main proceedings, a strike notice already issued at the time of the submission of the application for the certificate indicated that it would commence during the period of validity of the certificate, even if there were possibilities that in this case the strike would not take place or that it would not affect the undertaking in question."

26. In view of that answer, the three subsequent questions become, in my opinion, devoid of purpose. Accordingly, I shall examine them only as a subsidiary issue.

27. The second question is worded as follows:

"Are there, in respect of Articles 36 and 37, limits in time as to how long a strike that has been discontinued can be regarded as having the effect of force majeure, where an undertaking' s capacity at the time when the strike began and subsequently thereafter is fully utilized, when it is not possible to make either covering purchases for the needs of the undertaking' s production during the strike period or covering purchases in the form of finished goods during the strike period and in the period thereafter?"

28. In order fully to understand that question, it seems to me that it is necessary to recall to mind certain facts of the main action as they appear from the order making the reference.

29. First, it is not disputed that the competent Danish authorities had agreed to extend the period of validity of most of the advance-fixing certificates due to expire at the end of March 1985, as well as of certain certificates due to expire at the end of April, but refused Jaka' s application for an extension of the certificate in question until 12 July 1985 on the ground that "the effects of the strike which had taken place could not be considered as lasting for so long". Later, in the main proceedings, the Danish Ministry of Agriculture again considered that "a strike of short duration, approximately eight to ten days, may not constitute force majeure as regards the advance-fixing certificate in question" and that, "in any event, a strike of such short duration cannot be regarded as amounting to a case of force majeure for a period of almost four months, from 1 April until 26 July 1985" (see pages 5 and 7 of the order making the reference).

30. Secondly, the national court expressly states, in the order making the reference (page 4), that, following the strike which was lawfully terminated on 1 April 1985, Jaka, which had had to suspend production as from the same date, was able to resume production only gradually from 15 April 1985, as and when work was resumed in the abattoirs. Jaka, which had operated at full capacity until raw materials ceased to be available, could not make up for that delay and produce the quantities necessary to fulfil its export obligations in respect of the certificate in question within the time available, namely by 31 May, and so applied for its period of validity to be extended, in the first place until 12 July, and subsequently until 26 July.

31. Finally, it follows from an expert' s report, prepared as part of the main proceedings, that "Jaka' s capacities would have been sufficient to produce what was needed to comply with the advance-fixing certificate (in question) as well as to fulfil the other sales commitments which it had undertaken under the contracts which it had entered into, had there not been a strike around the end of March 1985" and that "that would have meant by and large a completely normal utilization of Jaka' s production capacity". The expert' s report indicates, moreover, that after the strike, and taking into account Jaka' s entire sales commitments as well as the fact that it was impossible for Jaka to obtain raw materials or finished products from third parties, "The full utilization of its production capacity would have allowed Jaka to complete the production of the quantity of preserved meat to which the advance-fixing certificate (in question) related by 5 July 1985" (see pages 4 and 5 of the order making the reference).

32. In view of that factual background and also the observations made in the context of the examination of the first question, I believe that the reply to the second preliminary question can be relatively brief.

34. It is in that sense that I propose that the Court should reply to the second question should it not consider that that question has become devoid of purpose.

35. As to the question whether or not it was possible to purchase from third parties the raw materials necessary for the undertaking' s production during the period of the strike, or to buy finished goods from third parties during the period of the strike and up to the expiry of the certificate, it relates, in reality, to the very existence of a case of force majeure. In fact, even supposing the strike to have been unforeseeable, the existence of a case of force majeure could only be recognized if the economic operator did not find it possible to avoid the consequences of the strike by making such purchases.

36. That is why I shall not deal with that aspect of the question in the reply suggested, which is the following:

"Articles 36 and 37 of Regulation No 3183/80 must be interpreted as meaning that the effects of a strike which may be regarded as having the effect of force majeure may be taken into consideration only for a period corresponding to that of the strike, increased where necessary to take account of the delays in resuming production which the strike may have caused, provided that the undertaking' s capacity was fully utilized both at the time the strike began and afterwards."

37. By its third and fourth preliminary questions, the national court essentially seeks to ascertain the criteria which must guide the competent authority of the Member State in which the certificate was issued when it has to choose, in application of Article 37 of Regulation No 3183/80, between cancelling an advance-fixing certificate and extending its period of validity.

"Where the circumstances relied upon constitute force majeure, the competent authority of the Member State in which the licence or certificate was issued shall decide either that the obligation to import or export be cancelled, the security being released, or that the period of validity of the licence or certificate be extended for such period as may be considered necessary in view of the circumstances invoked...",

without, however, defining the criteria which must govern the choice of the competent authority. The necessity for a uniform application by the competent authorities of the various Member States, however, precludes the discretion which they undoubtedly have in this area from being entirely free. In the absence of express factors of assessment, any possible restrictions can only arise, in my view, from the regulatory context in which the national authorities are called upon to act and in which their discretion must be exercised.

39. On that point, it must first of all be stated that they must rule on an express application by the interested party, who must not only rely on and prove force majeure but, according to Article 36(1) of Regulation No 3183/80, must also request either cancellation or extension: the interested party must thus express his preference and the competent authority must make its decision with reference to that preference. I infer from this that the competent authority must ensure that the interests of the operator concerned are included among the factors taken into consideration. I consider that the third sentence of Article 37(1), according to which "the decision of the competent authority can be other than that requested by the titular holder", tends to confirm the foregoing: if the interests of the titular holder did not have to be taken into account and if the decision requested by him did not have to form one of the principal factors to be taken into consideration, that statement would have been superfluous.

40. In the second place, it is necessary to take account of the fact that, if the option of extension is chosen, the purpose of this is, as the Court ruled in its judgment of 16 December 1982 in Case 71/82 (Brueggen [1982] ECR 4647, at paragraph 14), to enable the titular holder "to effect the export transaction at the rate of refund fixed in advance in that licence in spite of the obstacles arising out of the events which have constituted force majeure", or, as the Commission acknowledged in its examination of the second preliminary question, that "decisions to extend the validity of an advance-fixing certificate taken by the national authorities must have the effect of putting the operator in a situation comparable with that which would have existed if the case of force majeure had not arisen".

41. It is obvious, however, that the holder of such a certificate will tend to request cancellation or extension according to whether the rate of refund has increased or decreased since the time of advance fixing: in the first case, he will request a new certificate so as to be able to export at a more favourable rate; in the second case, he will request an extension in order to be able to export at the more advantageous rate as fixed in advance. Just as in the first case the competent authority must refuse cancellation and decide to grant an extension so that the exporter is not in a more favourable position following the force majeure, I believe that in the second case it should, as a general rule, grant the request for extension in order to ensure that the exporter may carry out his operation upon the conditions which had been fixed before the occurrence of the event constituting force majeure.

42. I consider that it is essentially to enable the competent authority to proceed as I have just described that Article 37(1) provides that it need not necessarily adopt the decision requested by the titular holder. The Commission, the author of Regulation No 3183/80, seems to share that view when it states that "the provisions of Article 37 are intended to prevent the authorities empowered to issue certificates from systematically taking decisions which are exclusively favourable to operators who invoke a case of force majeure" (see the end of paragraph 8 of its written observations).

43. That approach seems to me, moreover, also to be found in the fourth sentence of Article 37(1), which is in the following words: "Where a request for cancellation of a licence which includes advance-fixing, or of an advance fixing certificate, has been received more than 30 days after expiry of the period of validity of the licence or certificate, the competent authority may decide, instead of cancellation, to extend the validity period if the advance fixed rate, after any adjustments thereto, is, when a refund, less than the current rate, or, when a levy, higher than the current rate."

44. This provision evidently constitutes an exception to Article 36(2) of Regulation No 3183/80, which provides that "A request to extend the period of validity of a licence or certificate must be received not more than 30 days after the expiry of such period of validity".

45. It is intended to ensure that the competent authority may extend the period of validity of the licence or certificate despite the expiry of the period of 30 days and is thus able to make certain that the titular holder is obliged to carry out the projected operation upon the conditions originally established. In the absence of that provision, the titular holder would have been able to avoid extension, and thus take advantage of conditions different from - and more favourable than - those initially envisaged, simply by waiting for the expiry of the period of 30 days after which, as a rule, only cancellation is possible.

46. It is also necessary to refer in this context to the judgment of the Court of 16 December 1970 in Case 36/70 Getreide-Import ([1970] ECR 1107, paragraph 13), according to which, since cancellation and extension "are intended only to resolve difficulties which importers or exporters experience in meeting their obligation to import or to export within a fixed period, it would be contrary to this objective to allow the person concerned to benefit on the pretext of these difficulties by putting him in a position more favourable than that of his competitors who have not experienced comparable difficulties".

It is a matter, therefore, of comparing the situation of the interested party with that of his competitors who have not experienced the same difficulties as he has, that is to say those who had obtained an advance-fixing certificate upon the same conditions as himself, but who, unlike him, have succeeded in importing or exporting within the prescribed periods. It follows from this that, if the rate of refund has fallen since the time of advance-fixing but has not fallen further after the expiry of the initial period of validity of the certificate of the person claiming force majeure, extension could be granted, since it would allow him to benefit only from the normal advantages inherent in the advance-fixing certificate which he had obtained. Conversely, extension would put him in a position more favourable than that of his competitors if the refunds were to fall or continue to fall after that date, but before the date of actual exportation. That was not so, however, in the case in point: the rate of refund, fixed at Dkr 0.50 per kilogram of ham with effect from 14 May 1985, and therefore still within the original period of validity of the contested licence, was still applicable at the time of the actual exportation, 26 July 1985: an extension of the period of validity of the licence would not, therefore, have secured for Jaka an advantage additional to that from which it would have benefited had it been able to export within the period allowed, that is to say before 31 May 1985.

47. Finally, the competent authority may also be led to refuse extension of the certificate if, in order to allow the exportation, the extension had to cover a relatively long period. Such may be the case when the circumstances constituting a case of force majeure or their effects are likely to persist and to prevent the exportation within a reasonable period. In Regulations Nos 473/67 and 102/64 the distinction made between the cases in which either cancellation or extension was the rule was based on such a criterion combined with the nature of the circumstances invoked: thus, that cancellation was, in principle, envisaged for cases of war or civil disturbance, government bans on exports or imports, restrictions on navigation by acts of sovereignty, and shipwreck, while extension had to apply in cases of damage to ship or cargo, strikes, hold-up of navigation in periods of icing-up or low water, and mechanical breakdown. Furthermore, Article 37(1)) of Regulation (EEC) No 3719/88 (Official Journal L 331, p. 1), which has superseded Regulation No 3183/80, at issue here, expressly provides that the extension of the period of validity of the licence or certificate cannot be for more than six months, that being "in order to prevent possible disruption of the market" (see the first recital of the preamble on page 3 of Official Journal L 331 of 2 December 1988).

48. In the light of all the foregoing considerations, I propose that the Court should reply as follows to the third and fourth preliminary questions:

"Articles 36 and 37 of Regulation No 3183/80 must be interpreted as meaning that, when considering the application by the titular holder of an export licence which includes advance fixing of the refunds, or of an advance fixing certificate, for either cancellation of the licence or certificate or extension of its period of validity, the competent authority which has issued the licence or certificate must endeavour to ensure, as far as possible, that the exportation can take place at the rate of refund initially fixed in advance, unless this is precluded by the necessity to avoid distortions of competition, or unless the opposite decision appears more appropriate in view of the need for predictable management of the market."

Conclusion

49. To sum up, I propose that the Court should reply as follows to the first question submitted by the OEstre Landsret:

"(1) Articles 36 and 37 of Regulation No 3183/80 must be interpreted as meaning that there is no force majeure when supplies of raw materials to an undertaking which has obtained an advance-fixing certificate are halted owing to a lawful strike in other undertakings, if, in circumstances such as those of the main proceedings, a strike notice already issued at the time of the submission of the application for the certificate indicated that it would commence during the period of validity of the certificate, even if there were possibilities that in this case the strike would not take place or that it would not affect the undertaking in question."

50. In the event that the Court should consider that that reply does not render the other questions submitted by the OEstre Landsret nugatory, I propose that the Court should reply to them as follows:

"(2) Articles 36 and 37 of Regulation No 3183/80 must be interpreted as meaning that the effects of a strike which can be regarded as having the effect of force majeure may be taken into consideration only for a period corresponding to that of the strike, increased where necessary to take account of the delays in resuming production which the strike may have caused, provided that the undertaking' s capacity was fully utilized both at the time when the strike began and afterwards."

(3) Articles 36 and 37 of Regulation No 3183/80 must be interpreted as meaning that, when considering the application by the titular holder of an export licence which includes advance fixing of the refunds, or of an advance fixing certificate, for either cancellation of the licence or certificate or extension of its period of validity, the competent authority which has issued the licence or certificate must endeavour to ensure, as far as possible, that the exportation can take place at the rate of refund initially fixed in advance, unless this is precluded by the necessity to avoid distortions of competition, or unless the opposite decision appears more appropriate in view of the need for predictable management of the market.

(*) Original language: French.

(1) See, in particular, the judgment of 30 January 1974 in Case 158/73 Kampffmeyer [1974] ECR 101, at paragraph 8.

(2) That judgment concerns Commission Regulation No 473/67/EEC of 21 August 1967, on import and export licences for cereals, processed products derived from cereals, rice, broken rice and processed products derived from rice (JO 1967 L 204, p. 16), referred to below.

(3) The words in parentheses appear only in the Theodorakis judgment.

(4) See, on that point, the Court' s judgment of 11 July 1968 in Case 4/68 Schwarzwaldmilch [1968] ECR 377, at 386), whence it follows that an event takes on an unusual character when it "would have had to be considered as improbable by a prudent businessman exercising all due care". See also on that point Commission Communication C(88) 1696 concerning "force majeure in European agricultural law" (OJ C 259, p. 10, in particular paragraph I.2.a)1)).

(5) On the concept of "excessive sacrifice", see, in particular, the judgment in Schwarzwaldmilch, as well as the judgment of 17 September 1970 in Case 11/70 Internationale Handelsgesellschaft [1970] ECR 1125, at paragraph 23.